Many companies experience manufacturing delays, higher material costs, and poor customer service when the right materials are not available when and where they are needed. A solution that optimizes material planning and control based on product life cycles, customer-specific needs, and manufacturing plans and schedules is key to addressing these issues.
A challenge faces businesses having products that utilize the same critical material components but not have enough of those components to satisfy all product demand. An ideal material resource planner (MRP) would allow users to utilize those components in the best product mix to support the user's business goals. Furthermore, the ideal MRP should provide time-phased material availability and dynamic part/ingredient substitution and allocation to reduce work-in-process (WIP) inventory. The ideal MRP should also enable users to position the right materials effectively to support customer service and profitability. The ideal MRP should also allow users to manage and reduce the costs associated with those actions.
However, known MRPs allocate scarce parts to fulfill future orders regardless of shortage conditions for other parts that prevent completion of the order. This approach unnecessarily ties up inventory that could be used on other orders using the same parts. In addition, a traditional MRP allocates parts according to date priorities and is generally incapable of creating a plan that recognizes other priorities or directly supports period business objectives.
Existing supply chain management techniques use linear programming to maximize profits in view of various constraints, such as expected sales volumes, prices, and costs. However these techniques do not address other factors such as desired customer service levels, margin levels or inventory levels. Moreover, none of the known techniques allow a user to selectively weigh these factors as needed and desired.